Russia: Russian brewers forced to seek domestic hops alternatives

Restrictions against Russia have disrupted local beer brewers' supplies of hops and equipment, forcing them to seek domestic alternatives as they strive to keep their range of beers flowing, three brewing companies told Reuters.

Supply chain disruptions, sanctions over Moscow's actions in Ukraine and some Western firms choosing to halt supplies to Russia have combined to reduce brewers' access to U.S. and European hops, but as foreign competitors vacate the market, some Russian firms see an opportunity.

Sergei Baranov, head of Russian brewing company Khmelyoff said they have used German hops for 15 years, but this year trialled hops from Russia's Chuvash Republic, a region around 585 km (365 miles) east of Moscow.

"In principle we are happy with the quality," Baranov said, adding they would order more.

He said logistics and payment problems meant Khmelyoff could not pay its partners in Germany directly, even though deliveries of hops have not been sanctioned.

Russia, which imports the vast majority of its hops from the likes of the United States, Germany and the Czech Republic, does not produce a wide enough variety of its own hops to brew more sophisticated types of beer, Vyacheslav Vetelev, founder of LaBEERint Brewery, told Reuters.

"We can't brew the same types of beer that our consumers are already used to, only Chuvash hops," said Vetelev, who has used hops from the United States, England, Germany, New Zealand and Australia.

Vetelev, who described Russian entrepreneurs as "iron people", given the almost annual challenges they face, said Russia needed to develop the hops varieties it produces.

While craft breweries struggle to adjust, some larger players see opportunities as the market transitions, such as Afanasy, a large brewer located in Tver, about 160 km (100 miles) northwest of Moscow.

"Now our direct competitors have left and there is more shelf space for us, and consumers are already turning their attention to our product," said General Director Vadim Deshyovkin.

Foreign brewers Carlsberg and Heineken have stopped producing their flagship brands in Russia, while Anheuser-Busch InBev is seeking to extricate itself from a joint venture in Russia with Turkey's Anadolu Efes.

Deshyovkin acknowledged that Afanasy is currently facing difficulties, but is building new supply chains, seeking new partners, and its Tver factory is operating at close to full capacity, producing nearly 10 million decalitres per year.

"I am sure that we will overcome (the difficulties) in the coming year," Deshyovkin said. "We will adjust our business processes for supplying missing components or raw materials and then will emerge from this current crisis successfully."

According to federal statistics service Rosstat, Russia produced 410 million decalitres of beer in January-June 2022, up 2.7% year on year.

14 September, 2022